The National Treasury has discovered Sh83 billion in government-backed debt that state-owned enterprises must repay, which creates new worries about Kenya’s financial stability because it increases costs for common citizens.
The latest debt disclosures showed that State-Owned Enterprises (SOEs) had government-backed loans, which included 304 billion shillings in contingent liabilities that would activate if essential parastatals failed to fulfill their obligations.
The three major corporate borrowers face concerns because they possess government-backed debt, which makes taxpayers responsible for all financial obligations if loan defaults occur. The Kenya Electricity Generating Company (KenGen) leads the list of strategic entities that support national infrastructure and transport networks.
Debt analysts report that the fiscal system suffers from serious weakness despite the fact that guaranteed exposure represents a smaller portion of total public debt. The government does not include guaranteed obligations in its budget until a default event forces the obligations to become actual commitments, which allows them to bypass normal financial inspections until urgent situations arise.
The disclosure comes at a time when people are examining Kenya’s fiscal path because public and public-backed debt has reached 67 percent of gross domestic product, which makes the Treasury department acknowledge increased refinancing and sustainability hazards.
The government received a demand from opposition lawmakers together with financial watchdogs, who used the revealed information to request stronger regulatory measures that should immediately cap all contingent liabilities, which they claim have increased without proper public examination. The Ministry of Finance has not yet provided its complete answer, which will describe all the corrective actions it plans to implement.
Economists warn that Kenya faces a continuous threat of sovereign debt expansion until the government establishes stricter regulations on guaranteed lending and develops transparent performance evaluation standards for state-owned enterprises.
Leave a Reply